Q2 2025 INDUSTRIAL & OFFICE MARKET UPDATE
- Colliers | Columbus
- Jul 8
- 5 min read
Updated: Jul 16
Written by: Stephanie Morris
Stephanie specializes in research capabilities, providing support for the Colliers Columbus Office, Industrial and Retail groups. She is responsible for executing data reports, maintaining a commercial property database, reporting quarterly trends, performing data analysis and utilizing statistical information to predict future behavior in the market. Keep reading for her take on market trends in the Columbus office and industrial sectors.
Industrial Market Update
Leasing activity remains strong in key submarkets, driving down big-box vacancy and reinforcing confidence in the region’s modern industrial market.
Quarter in Review
Leasing activity and continued tenant interest in modern distribution space led to 1.87 million square feet of positive absorption.
Vacancy rates are expected to decline slightly in the second half of 2025 as the market absorbs new supply, and below average speculative construction is underway. Modern bulk vacancy rates decreased nearly 2% quarter-over-quarter, outperforming general industrial product.
Rent growth accelerated modestly, increasing by $0.14 per square foot quarter-over-quarter. Modern bulk space continues to command a premium with asking rents 5.9%higher than general industrial product.
Speculative projects are leasing at a steady pace, with 77%of 2022–2025 completions now occupied or under lease.
Average lease-up time for modern bulk deliveries stands at 11.3 months.
Speculative construction is steadily increasing with eight projects totaling 1.16 million square feet breaking ground in the second quarter.
The active construction pipeline totals 5.4 million square feet with 37% speculative and 63% build-to-suit.
Speculative development is concentrated in the East and Licking submarkets with 44% and 30% of total square footage under construction, respectively.
Forecast
Tenant demand for modern logistics and manufacturing space is expected to remain healthy in the second half of 2025 as occupiers continue to expand regional distribution networks and invest in nearshoring and advanced manufacturing operations. Developer sentiment is improving alongside leasing velocity with speculative groundbreakings likely to persist in the 50,000 to 300,000 square foot range. While the delivery of speculative projects may apply modest upward pressure on mini-bulk vacancy, the pace of absorption suggests that vacancy will continue trending downward over the next two quarters.
Absorption & Leasing
The Columbus industrial market recorded 4.85 million square feet of leasing activity in Q2 2025. New leases accounted for 78% of total volume highlighting continued tenant demand for industrial space. Deals in Licking county represented 65% of new leasing activity.
Net absorption reached 1.87 million square feet, despite eight large-block vacancies over 100,000 square feet coming to market. The largest leases of the quarter were J. Boren & Sons Trucking occupying 1.28 million square feet at 12530 Refugee Road and Ryder Logistics occupying 766,663 square feet at 167-183 Heritage Drive in Licking County. The largest move out of the quarter was Joann Fabrics vacating 832,600 square feet at 1020 Enterprise Parkway in Madison County.
Vacancy & Market Rents
Total market vacancy rate fell by 0.59% quarter-over-quarter but remains 0.8% higher year-over-year. Buildings between 400,000-600,000 square feet recorded the largest decrease in vacancy, decreasing 2.1% quarter-over-quarter. This segment, challenged by elevated speculative supply, is now seeing stronger absorption. The Licking submarket recorded the largest decrease in vacancy dropping 4.3% quarter-over-quarter. Roughly 23.2% of modern bulk product is concentrated in the Licking submarket and now has the lowest modern bulk vacancy rate of 2.3%.
Rent growth is stabilizing, increasing $0.14 quarter-over-quarter. The Union County continues to command the highest average asking rate at $9.53 per square foot driven by a newer inventory base. Twenty percent of the Union County submarket inventory was constructed within the past five years. Modern bulk distribution facilities maintain a 5.9% rental premium over general industrial space.
Sales Activity
Investment activity remained steady in Q2 with total sales volume of $272.0 million. The average price per square foot stood at $94.92. Total sales volume was heavily weighted by the quarter’s largest transaction; ElmTree Funds purchased 11555 Briscoe Parkway, the 1.2 million square foot warehouse fully occupied by DSV, from developer VanTrust for $136 million. Only three other assets have traded for more than $100 million in the last 15 years. Another build-to-suit property sold in the second quarter. Eaton Vance purchased McKesson’s newest facility, 4448 Rickenbacker Parkway E, for $67.4 million. Additionally, Plymouth REIT acquired five properties across the Columbus market in a multi-market portfolio sale.
Check out the full Q2 2025 Industrial Trends report here!
Office Market Update
At the halfway point of 2025, the Columbus, Ohio, office market continues to demonstrate signs of gradual improvement. Momentum is building as more organizations roll out structured return-to-office policies, pushing demand for high-quality office space. In Q2 2025, Columbus posted nearly 69,000 square feet of positive net absorption, with Class A properties leading the way. Much of the activity has been concentrated in recently developed or newly renovated buildings, where tenants are prioritizing upgraded amenities, energy efficiency and flexible layouts. This flight to quality is reshaping the market and giving newer assets a competitive edge.
Although vacancy rates remain elevated compared to pre-pandemic norms, they are slowly trending downward for the first time in several quarters. The overall market vacancy declined slightly in Q2, bolstered by leasing activity in the urban core and select suburban submarkets. Landlords are still offering generous concessions to attract and retain tenants, but with absorption finally turning positive, there is cautious optimism that this tenant-favorable dynamic may begin to rebalance.
Looking ahead, the Columbus office market is poised for slow but steady improvements. Investors are eyeing Columbus as a value play, particularly in comparison to more volatile gateway markets. The focus going forward will be on modernizing existing inventory and enhancing tenant experiences through amenity-rich environments, wellness-focused design, and flexible space configurations. While hybrid work remains a long-term factor, its impact is beginning to normalize as companies reassess their space needs. Columbus remains a market to watch in the second half of 2025, with fundamentals that suggest resilience and long-term opportunity in the evolving office sector.
Absorption & Leasing
Lower Lights Christian Health Center signed the largest lease this quarter, a sublease totaling 15,325 square feet at 3000 Corporate Exchange Dr in the Westerville submarket. Net absorption will flatten over the near term as office attendance stabilizes and in-office job growth continues to expand. Over 250,000 square feet of new deals were signed this quarter, many with Q3 2025 commencement dates. Suburban net absorption was impacted by Central Insurance vacating 550 Polaris Pkwy and listing for sublease, contributing to negative absorption in Polaris. However, strong leasing activity in Westerville and Arlington/Grandview helped offset some of these losses. Newer developments, including Arlington Gateway, 330 Rush Alley at the Peninsula, and 6620 Mooney St at Bridge Park, have all benefited from strong occupancy rates ranging from mid-80% to high 90%.
Vacancy & Market Rents
The Columbus office market saw a modest decline QOQ in average asking rents to $21.83 per square foot, accompanied by an increase in vacancy to 19.31%. These shifts reflect an ongoing period of adjustment as companies continue to evaluate their long-term space requirements. However, signs point toward a market rebound fueled by a growing number of return-to-office mandates across both the public and private sectors. As tenant demand gradually strengthens, landlords are beginning to reinvest in their properties, adding modern amenities, reconfiguring layouts for greater flexibility, and enhancing on-site services, to better align with evolving workplace expectations. This renewed focus on quality is expected to stabilize vacancy levels.
Sales Activity
Sales activity slowed in the Columbus office market in Q2 2025, with total volume reaching $52.6 million across 31 transactions, a notable decline from the robust performance in Q1. Despite the drop in volume, investor confidence in office assets remains intact as evidenced by a rising average market price of $142 per square foot. This upward pricing trend reflects continued demand for well-located properties with repositioning potential. While Class A product remains desirable, investors are increasingly targeting smaller suburban assets where yield opportunities exist. The cautious tone in the market persists with sellers recalibrating pricing expectations and buyers remaining selective. Among the most notable transactions were the sales of Rivers Edge, which sold for $7.8 million, and 3344 Morse Xing, which sold for $7.75 million.
Check out the full Q2 2025 Office Trends report here!